Highway project land costs soar

Texas expects to spend a record $1.7 billion for highway rights of way in the next three years, as the Department of Transportation builds new roads and expands old ones in congested metropolitan areas.

Transportation officials have known for years that the state would need much of the land it is now buying, but a lack of money to build the roads has prevented them from buying the land when it was cheaper.

"The cost of land goes up in value each year, so the earlier you buy right of way the less you're going to pay. I could say the same thing about my house," said Vic Suhm, director of the Tarrant Regional Transportation Coalition. "The high cost is mostly a reflection of the greater amount of work they're doing in metropolitan areas, where the cost of right of way is higher."

The state's cost of buying right of way has almost tripled in just two years as officials finally begin urban projects such as Southwest Parkway, the 35W/820/183 North Tarrant Express and the Texas 114/121 DFW Connector in Grapevine. Those projects have been overlooked since the 1990s, when land probably would have cost less than half today's rate.

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About a dime of every transportation dollar now goes toward land. This year, the agency has budgeted $546 million to buy right of way and $5.4 billion for construction. Most of the money comes from state and federal gasoline taxes.

If a proposed two-year ban on toll projects passes in the Legislature, the cost of right of way could go even higher, because officials can't buy the land until they're ready to build the road.

The real estate budget doesn't even include right-of-way money for the Trans-Texas Corridor, a proposed toll road from North Texas to San Antonio. That project, which is under environmental review, may add $1 billion to the tab between 2010 and 2014, records show.

Public's money, landowners' rights

Critics say that while the state obviously has traffic problems that need to be fixed, the Transportation Department's actions are alarming -- and they urge landowners to protect themselves against being lowballed.

"Everybody feels we've got to build a highway now, but we're saying now is the time for us to make sure our members get a fair shake," said Billy Howe, Austin chief of the Texas Farm Bureau, which opposes Trans-Texas.

The Farm Bureau is pushing for several changes in state law that would require state agencies to offer landowners fair market value, pay their legal fees and share future revenue from the land if, for example, it is used for construction of a toll road.

Those provisions are included in several bills filed this legislative session.

John Campbell, the Transportation Department's right of way director, said the state is going out of its way to give owners a fair price -- perhaps to a fault. He said recent battles with landowners in Houston and Austin cost the state millions of additional dollars, and are partly to blame for the skyrocketing right-of-way costs.

"There are condemnation firms, law firms that specialize in representing citizens in condemnation proceedings, and they've gotten very effective in their marketing to prospective owners," Campbell said. "It's an opportunity for an enterprising attorney to hand out cards."

Even so, the Transportation Department still manages to buy 82 percent to 84 percent of its right of way through friendly negotiations with landowners, rather than condemnation and eminent domain, he said.

Mainly, it's the cost of the land that has changed. From 1994 to 2004, the agency spent an average of $123 million a year on right of way. But since 2005, the average has jumped to $528 million, records show. Roads built in urban areas are wider and require more acreage than rural roads, and the cost per acre is much higher.

In North Texas, the Transportation Department is buying right of way on several fronts:

Airport Freeway, Hurst: About 100 homes will probably be bulldozed for expansion of Texas 183/Airport Freeway.

Most residents have been waiting for an offer from the state since the project was announced in 1993, when land was much cheaper. And many residents say the prospect of the road project held down the value of their homes all those years.

They're encouraged that the Transportation Department is finally serious about buying their land.

"I could use a new air conditioner and attic insulation, but it doesn't make sense to do those improvements when you know it's just a matter of time before the state takes it," said Doug Breaux, who lives in the 500 block of Plainview Drive.

About two dozen homes on Plainview Drive have already been bought because the owners qualified for medical hardships.

The Transportation Department has declined to release sales prices, saying it is still buying land in the neighborhood. Many of the 1,600- to 2,300-square-foot houses now owned by the state have market values ranging from $108,000 to $156,000, according to the Tarrant Appraisal District.

The residents were also paid tens of thousands of dollars to offset relocation costs, neighbors said.

"From our standpoint, it's a fair deal," Breaux said. "I haven't talked to anyone on this side of the road who doesn't think they're being treated fairly, other than the time it has taken to get it done."

The project calls for expanding the six-lane highway to 10 lanes with toll lanes in the middle. The Transportation Department is seeking private bidders to build and manage the project.

Expected cost of right of way: $100 million.

Southwest Parkway, Fort Worth: The cost of buying right of way for Southwest Parkway is now estimated at $126 million, nearly double the $69 million projected just two years ago when the project was federally approved.

"There's so much interest in the central city ... we're seeing some increased costs in acquiring the property, and you have to do business relocations," said the city's project manager, Bryan Beck, who in December had to ask the City Council for an extra $11 million for right-of-way costs.

All but a handful of properties have been bought, and construction of the road from Interstate 30 to Altamesa Boulevard is expected to begin in early 2008.

The city and the state Transportation Department have declined to release sales prices for individual pieces of land purchased for ongoing Tarrant County projects, saying such disclosure could affect negotiations with neighboring landowners.

Texas 114/121 DFW Connector: The project, known by many residents as the Grapevine Funnel, will probably require $81 million for right of way. The area where seven highways come together between Lake Grapevine and Dallas/Fort Worth Airport will triple to 24 lanes at its widest point, near Texas 121 and Interstate 635.

Construction is expected to begin in early 2008. The state is seeking private bidders to build and manage the project.

Eminent domain

Eminent domain is the power of a government body to take private land for public use. Building roads is one of the most common reasons that land might be taken.

In most cases, the Texas Department of Transportation can't legally buy right of way until an environmental study is conducted. Exceptions can be made for landowners with medical hardships.

Once a project is approved, the agency's right of way division contacts property owners, appraises the property and makes an offer. Landowners may refuse the offer and negotiate for more money, including relocation costs.

If the parties can't agree, the state may initiate condemnation proceedings. A judge in the county where the land is is asked to form a three-person panel to hear the case.

If the landowner disagrees with the panel's decision, he or she can sue for additional compensation. In the meantime, the government can take ownership.

Local control of state right of way

Traditionally, decisions about funding for North Texas right of way have been made at Texas Department of Transportation headquarters in Austin.

But starting in 2009, the state Transportation Department plans to provide annual lump sums to the Regional Transportation Council. The RTC is made up of 40 North Texas officials, including mayors and county commissioners, who will then be responsible for buying private land for roads.

Up to 12 percent of a project's funding will be set aside for right of way and included in the annual lump sum.

"I think it's going to help us move forward with our projects and stay on top of them," said Tarrant County Judge Glen Whitley, a member of the RTC.

But Bill Blaydes, a Dallas City Council member and an RTC member, worries that 10 percent to 12 percent won't cover the costs of many projects. In urban areas where property values are high, right of way sometimes eats up 30 percent or more of a project's costs.

"Who's going to be responsible for the money?" Blaydes said during a recent RTC meeting. "Is it going to fall on the shoulders of mayors, county judges? I see more headache in this than benefit."

Planning ahead saved millions

In the mid-1980s, Alliance Corridor developer Hillwood donated about 280 acres in far north Fort Worth to the Texas Department of Transportation to jump-start construction of Texas 170. The state then built frontage roads, which opened up the area for commercial use, and set aside room for main lanes.The donation was worth perhaps $2 million at the time, said Russell Laughlin, Hillwood senior vice president. Today, the same land in the booming Alliance area might cost $50 million -- a prohibitive price -- and at that cost the road might not have been built.